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By Hugh Cameron
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Beijing’s latest rare earth restrictions, intended to consolidate an already dominant position and boost its leverage amid ongoing trade negotiations, may be an ill-judged gambit that could see China cede control over what is shaping up to be the 21st century’s most critical supply chain.
Under the new rules—unveiled by China’s Ministry of Commerce last week and set to take effect in December—foreign firms will be required to secure government approval before exporting magnets and certain semiconductor materials that contain even trace elements of Chinese-source rare earths.
“China’s move fits squarely within the broader U.S.–China strategic rivalry, where both powers are waging political and economic warfare beneath the threshold of open conflict,” said Ryan Kiggins, political science professor at the University of Central Oklahoma and nonresident fellow at the Armed Services Institute. “Rare earths sit at the heart of this contest: they underpin advanced weapons systems, EVs, and the energy transition—sectors that define 21st-century power.”
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Acknowledging the centrality of rare earths to the modern economy—but also China’s current stranglehold on global supplies—U.S. Treasury Secretary Scott Bessent accused Beijing of taking a “bazooka” to the “industrial base of the entire free world.”
Trade Representative Jamieson Greer struck an equally ominous tone during a joint news conference with Bessent on Wednesday, describing the move—which builds upon restrictions introduced earlier this year—as “an exercise in economic coercion” that would grant Beijing “control over basically the entire global economy and the technology supply chain.”
Such statements are not without warrant. Decades of investment in its extraction capabilities, coupled with lax environmental regulations, mean that China now exerts a near-monopoly over rare earths—accounting for an estimated 70 percent of the world's supply, a similar share of America’s imports and dominating roughly 90 percent of global processing capacity.
“Manufacturers now face serious supply risks and rising input costs, exposing the fragility of Western production networks and their reliance on Chinese materials,” said Jamie Underwood of the critical minerals consultancy SFA (Oxford), adding that military systems in particular will be affected by such a de facto ban. Jane Nakano, senior fellow at the Center for Strategic and International Studies (CSIS), told Newsweek that rare earths are "a well-known Achilles Heel for industrial economies like the U.S. and its export control is one of the most potent leverages Beijing has.”
But experts believe that China, by wielding its rare earth dominance so aggressively, may be dulling one of the sharpest tools in its geopolitical arsenal and accelerating the global pivot toward alternative sources not subject to such abrupt embargoes.
“Today’s restrictions may push Washington and its allies to double down on reshoring, stockpiling, and recycling strategies that ultimately dilute China’s leverage,” said Kiggins. “In the near term, Beijing can impose pain; in the long term, it may be underwriting the emergence of a parallel rare earth ecosystem outside its control.”
“Prolonged curbs could overinflate rare earth prices, attract excessive investment, and ultimately erode China’s market share while driving innovation that undermines its leverage,” Underwood told Newsweek.
"Make no mistake, this is China versus the world," said Bessent on Wednesday, while warning that the latter would be prepared and able to "decouple" from the former's market for the critical elements.
And investors appear to be banking on such a shift. Shares in American rare earth extractors and producers soared when markets opened this week, while Australian mining companies involved in critical minerals projects made similarly striking gains on Tuesday. Meanwhile, JPMorgan Chase announced that it will be investing billions in “industries critical to national economic security and resiliency” including critical minerals—a sector whose reliance on foreign supplies CEO Jamie Dimon called a “painfully clear” vulnerability.
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Brian Menell is the chairman and CEO of TechMet Limited, an investment firm focused on companies it believes can help secure a “western-aligned critical minerals supply.” In an interview with Newsweek, Menell said the U.S. has the capacity to pare down its reliance on China, and that recent developments may have provided added impetus.
“They can ultimately outspend the Chinese government and private sector, and they can out-innovate the Chinese in order to change the technologies across the supply chain to make them quicker and cheaper and cleaner, and less dependent on China,” he said. “And that's what we're starting to see happening.”
Menell said that TechMet, which has received funding from the U.S. International Development Finance Corporation as well as Qatar’s sovereign wealth fund, has been in contact with American government agencies “every day” over how to accelerate the move toward a “China-free” supply of rare earths.
“We’re busy with all of those departments on various initiatives and all of them are being accelerated and prioritized,” he said, adding that since last week’s announcement, things are “being accelerated further because it's that much more obvious and that much more urgent.”
As he noted, the vulnerabilities created by a dependence on China for rare earths have long been recognized in both the public and private spheres, prompting significant investments and recently sparking breakthroughs in refining capabilities.
In July, Apple announced a $500 million partnership with MP Materials to purchase the latter’s rare earth magnets while together establishing new recycling and manufacturing facilities in California and Texas. Meanwhile, in May, Australian company Lynas became the first outside of China to produce so-called “heavy” rare earths, having successfully manufactured dysprosium oxides at its facility in Malaysia.
And although China operates the world’s largest rare earth mine, in Inner Mongolia, the U.S. is not without its own mineral endowments, like the Mountain Pass mine and processing facility in California and the Spruce Pine Mining District in North Carolina, estimated to supply 70 percent to 90 percent of the world's high-purity quartz.
But the sheer scale of China’s rare earth production and processing capabilities—combined with its historic dominance of supply—will “be hard to match anytime soon,” according to Nakano at CSIS.
“China is not standing still either,” she told Newsweek. “They will likely continue to develop their mineral supply chains to nurture its leverage.”
Nakano said the latest restrictions from China could be a means of extracting more concessions from Washington in ongoing trade negotiations, while Menell described them as likely a “shot across the bow” that will be tempered before taking effect in December.
Despite the stakes, tones remain conciliatory ahead of the scheduled meeting between U.S. President Donald Trump and Chinese President Xi Jinping late this month—with Trump writing on Truth Social that the U.S. wants to “help China, not hurt it,” and Bessent proposing an extended pause on higher tariffs if Beijing walks back last week’s announcement.
But years of China leveraging its rare earth dominance appears to have already pushed the world on the path toward diversification. While a lengthy process, the urgency of this shift has only strengthened in step with the gravity of each new restriction from Beijing.
“China still dominates rare earth separation and magnet production, so these controls will raise prices and remind Washington of its vulnerability,” Kiggins said. “But strategic coercion through supply chain control rarely yields lasting advantage.
“Each time China tightens the spigot, it accelerates the political will and capital investment necessary to erode its own dominance.”
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